1. Definition

In the State of Wisconsin, the definition of gambling is contained within the definition of “lottery” as found within the Criminal Code. The definition of lottery is:

“[A]n enterprise wherein for a consideration the participants are given an opportunity to win a prize, the award of which is determined by chance, even though accompanied by some skill.” Wis. Stat. § 945.01(5) (2006).

The definition of lottery excludes pari-mutuel wagering, bingo or raffles, and the state lottery, where each is validly conducted under its respective statute. Id.

The same statute also defines consideration as used within the definition of lottery: “anything which is a commercial or financial advantage to the promoter or a disadvantage to any participant but does not include any advance to the promoter or disadvantage to any participant . . . .” Id. Furthermore, the statute excludes various activities from the meaning of ‘consideration’ including filling out a coupon or entry form received through the mail, filling out a coupon or entry form received in a newspaper or magazine or listening to or watching a television or radio program. Id.

2. Wisconsin applies predominance test

It appears that Wisconsin law applies a predominance test in determining whether a game will be classified as a contest of chance or skill. In order to qualify as a lottery the elements of prize, chance and consideration must all be present; if one element is lacking then it will not qualify as a lottery. State v. La Crosse Theaters Co., 286 N.W. 707, 710 (Wis. 1939). Consideration is satisfied, for example, by paying money for a lottery ticket. Zimmerman, supra at 4. Chance is present when there is a random selection process for determining the winner; the prize element is present where select participants receive some sort of prize (i.e. money). Id. Furthermore, since the definition of lottery indicates that some skill may be present, it is important to note that the presence of skill does not tend to negate the characteristic of chance that may be present in the game. 62 Op. Atty Gen. Wis. 122 (1973).

Bookmaking is defined by Wisconsin Statute as “the receiving, recording or forwarding of a bet or offer to bet on any contest of skill, speed, strength or endurance of persons or animals.” Wis. Stat. § 945.01(2) (2006).

1. Definition of gaming device

A gambling device is referred under Wisconsin Code as a gambling machine. A gambling machine is defined as a “contrivance which for a consideration affords the player an opportunity to obtain something of value, the award of which is determined by chance, even though accompanied by some skill and whether or not the prize is automatically paid by the machine” Wis. Stat. § 945.01(3) (2005). A gambling machine, under Wisconsin statute, does not include a device used in a valid and legal bingo or raffle event; an amusement device that rewards the player with one or more nonredeemable free replays for achieving certain scores and; an amusement device that involves skill, if it rewards the player with merchandise as a prize. Id.

2. Poker machine

In Paepke v. Leck, 496 N.W.2d 181, 182 (Wis. Ct. App. 1992), the Wisconsin Appellate Court held that a bar owner’s video poker machine did not constitute a gambling machine, as defined by statute; the machine fell into one of the exceptions because the only reward it provided players was with free replays. In contrast to Paepke, the Wisconsin Court of Appeals in State v. Hahn, 553 N.W.2d 292 (1996), determined that a video poker machine could be used for either amusement or gambling purposes. Therefore, the court felt that it was up to the jury to make the determination whether the business owner violated the statute by using the machine as a gambling device. Id. In Hahn, the video poker machine was held to be a gambling device because, although it only awarded free replays, the tavern keeper was awarding cash for the free replays won. Id.

3. Pinball machine

Also in contrast to both video poker machine cases discussed above, is State v. Lake Geneva Lanes, Inc., 22 Wis.2d 151, 125 N.W.2d 622 (1963), where the Supreme Court of Wisconsin held that a pinball machine that rewarded player’s with a free play was a gambling machine. The Court held that the free play was an item of value, awarded, based on the player’s luck and skill. Id.

Wisconsin does not appear to have any statutory, attorney general opinion, or case law definitions of bookmaking.

In Paepke v. Leck, 496 N.W.2d 181 (Wis. Ct. App. 1992), the court states that the construction of the statute defining gambling machine should not be so strictly construed as to include articles such as pool tables, dart boards and similar game devices.

Billiards:

Although there does not appear to be state statute in Wisconsin governing games of skill, case law indicates that local county ordinances can set forth rules and regulations to govern games of skill, in particular for governing billiards. In State v. City of Milwaukee, 33 Wis.2d 624,148 N.W.2d 21 (Wis. 1967), the validity of a county ordinance governing pool halls was challenged. The county ordinance at issue regulated billiard parlors and not other recreational facilities; furthermore, the statutory definition of a billiard parlor was designed, in such a way, that it excluded businesses below a certain size. Id. The Supreme Court of Wisconsin held that the county ordinance was neither unreasonable nor discriminatory, and that the ordinance regulating billiard parlors was a valid use of police power to protect public health and safety. Id.

1. Lottery:

The Wisconsin State lottery was adopted in 1987 through a constitutional amendment creating an exception to the gambling prohibition. Art Zimmerman, State Lottery, Pari-Mutuel Wagering and Racing, and Charitable Gaming, Wis. Legislative Bureau at 3 (Jan. 2005), available at www.legis.state.wi.us/lfb/Informationalpapers/80.pdf (“Prior to 1965 . . . the Wisconsin Constitution stipulated that ‘the legislature shall never authorize any lottery . . . ’ This provision was broadly interpreted to exclude all forms of gambling in Wisconsin.” However, amendments to the constitution have modified this strict gambling prohibition. Id. at 1). Although the constitutional amendment authorized the state lottery, Chapter 565 of the Wisconsin Statute is the governing law which provides the rules for the operation of lottery games and the Department of Revenue is responsible for the operation of the lottery. Id., Wis. Stat. § 565 (2006).

Wisconsin offers a variety of lottery games including: instant games (“scratch” tickets and pull-tab games); “on-line” games where tickets are distributed from terminals linked to the state lottery’s central office computer; daily and weekly draw games; and the State also participates in the multi-state game of Powerball. Zimmerman, supra at 5.

Lottery is defined in the Wisconsin Statute under the criminal code and the scope of the term seems to be the general definition for what constitutes gambling within the State. However, despite this definition of lottery as an illegal activity in the state, the statutory definition of lottery clearly excepts the State Lottery as operated under Chapter 565.

2. Charitable Gaming:

The Office of Charitable Gaming governs charitable Bingo and Raffles, authorized via constitutional amendments in 1973 and 1977 respectively, within the Division of Gaming. Art Zimmerman, State Lottery, Pari-Mutuel Wagering and Racing, and Charitable Gaming, Wis. Legislative Bureau at 25 (Jan. 2005), available at www.legis.state.wi.us/lfb/Informationalpapers/80.pdf.

a. Bingo:

A license is required to conduct bingo games; those eligible to apply for a license include “bona fide religious, charitable, service, fraternal or veterans organization or any organization, other than the state or any political subdivision of the state, to which contributions are deductible for federal income tax purposes or state income or franchise tax purposes . . . .” Wis. Stat. § 563.11 (2006). Individuals who wish to sell or distribute bingo supplies or equipment to an organization licensed to conduct bingo must apply to the department for a supplier’s license. Wis. Stat. § 563.21 (2006). The statute further provides guidelines for individuals who are not eligible for a supplier’s license, restrictions for delinquent child care payment, and supplier prohibitions. Wis. Stat. § 563.27-.29 (2006). The conduct of bingo is heavily regulated by Wisconsin Statute § 563.51 ranging from who is allowed to conduct the bingo game, locations, equipment, value of prizes, types of prizes, age limitations and methods of play.

b. Raffles:

The portion of the Charitable Gaming Statute in Chapter 563 dealing with raffles, provides a similar definition for qualified organizations, as is found in the bingo portion of the statute: “[a]ny local religious, charitable, service, fraternal or veterans organization or any organization to which contributions are deductible for federal income tax purposes or state income or franchise tax purposes . . . .” Wis. Stat. § 563.90 (2006). An organization qualified to conduct raffles under the statute, may not conduct more than 200 raffles in a year. Wis. Stat. § 563.91 (2006). A license is required to conduct a raffle; however, there are two types of licenses available. Wis. Stat. § 563.92 (2006). A Class A license is required where the tickets for the raffles are sold on days other than the same day as the raffle drawing. Id. A Class B license is for raffles where all tickets are sold on the same day as the raffle drawing. Id.

In Wisconsin State Counsel v. Wisconsin, the court of appeals upheld the denial of an application for a raffle license to an organization that did not meet the statutory requirement of being a local organization. 444 N.W.2d 447 (Wis. Ct. App. 1989). The court concluded that The Knights of Columbus, the organization seeking the license, was a statewide organization and that failed to qualify as being local to satisfy the language of the applicable statute. Id. The court relied on a 1986 Attorney’s General Opinion in coming to their final holding; the opinion addressed the meaning of the term ‘local’ within the statute and concluded that is meant something less then statewide. Id. at 449.

In contrast, a political organization has been deemed to qualify as an organization for a raffle or bingo license. 67 Op. Att’y Gen. Wis. 323 (1978). However, the opinion also points out that all political organizations may not qualify because of the additional requirement of how long the organization has been in existence in Wisconsin. Id.

3. Pari-Mutuel Wagering:

In Wisconsin, pari-mutuel wagering is governed by Chapter 562: Regulation of Racing and On-Track Pari-Mutuel Wagering, of the Wisconsin Code. See Wis. Stat. § 562 (2006). Pursuant to Wisconsin Statute, the state allows wagering on horse and dog races. Wis. Stat. § 562.01 (2006). Specifically for greyhound racing, a participating dog must be registered with the National Greyhound Association of Abilene, Kansas. Wis. Stat. § 562.056 (2006). In order to engage in the ownership, operation, sponsorship or management of a racetrack where pari-mutuel wagering is conducted, the appropriate licensing must be obtained. Wis. Stat. § 562.05 (2006). Wagering may not be conducted at any location outside of the racetrack where the race is being conducted. Wis. Stat. § 562.11 (2006).

Snowmobile racing may be conducted with wagering pursuant to a pari-mutuel system. Wis. Stat. § 562.124 (2006). Such snowmobile racing and wagering may be authorized by the Division of Gaming in the Department of Administration, provided it does not conflict with animal racing; also if the Department permits snowmobile racing then they are also required to regulate the wagering and promulgate rules for the administration of the race. Id.

In an Attorney’s General Opinion the question addressed was whether land obtained by the county could be leased to a private-entity for the operation of a licensed racetrack. Office of the Attorney General of Wisconsin, 14-91 (1991). The opinion provided a two-fold answer: where the county had initially obtained the land with the intention of using it for a valid public use and then subsequently leased it to a private-entity for use as a racetrack, such a transaction is permissible. Id. However, where the county obtains the land with the full intention of immediately leasing to an entity for use as a racetrack, then that would not be permissible. Id. The opinion indicated that the second situation was not permissible because a racetrack does not qualify as a valid public use. Id.

The statute governing pari-mutuel wagering requires that wagers for races occur “on-track”; the scope of this term was addressed in an Attorney’s General Opinion. On-track betting was determined, by the Attorney General, to have two interpretations: (1) wagering at a licensed racetrack where the race is taking place; and (2) wagering at a licensed racetrack other then where the race is taking place. Op. Att’y. Gen. 66-88 (1988). This opinion concluded that the simulcasting of races from one licensed racetrack to another license racetrack within Wisconsin was not a violation of the constitutional requirement of “on-track” betting, and felt that courts would also uphold the constitutionality of the section. Id.

4. Crane Games:

The Department of Administration is provided with the statutory authority to monitor, audit, investigate and provide security services for crane game operations. Wis. Stat. § 564.02 (2006). A crane game is defined as “an amusement device involving skill, if it rewards the player exclusively with merchandise contained within the amusement device proper and limited to prizes, toys and novelties . . . .” Id. The statute further defined skills as “within an opportunity provided for all players fairly to obtain prizes or rewards or merchandise, a players precision, dexterity or ability to use his or her knowledge which enables him or her to obtain more frequent rewards or prizes than does another less precise, dextrous or knowledgeable player.” Id.

In a 1998 Western District of Wisconsin case, the plaintiff’s were permanently enjoined from forming a corporation for the purpose of operating internet gambling and also from operating an internet gambling website within the State of Wisconsin. On-Line Int’l Inc., v. Thompson, 1998 U.S. District (W.D. Wis. 1998).

1. Making a bet, entering a gambling place with intent to make a bet, playing or participating, and intent to conduct or conducting a lottery are all Class B Misdemeanors. Wis. Stat. § 945.02 (2006).

a. A bet is defined as “a bargain in which the parties agree that, dependent upon chance even though accompanied by some skill, one stands to win or lose something of value specified in the agreement.” Wis. Stat. § 945.01 (2006). A bet does not include bona fide business transactions or offers of a purse or prize for actual contestants in any bona fide contest of skill, speed, strength or endurance. Id.

b. A gambling place is any building, tent or vehicle where the principal use of any part of the location is for the making, settling, and holding of bets, conducting lotteries or playing gambling machines. Id. Case law indicates that evidence of prior gambling activity taking place at the location in question is necessary to prove that the facility is in fact a gambling place. State v. Nixa 360 N.W.2d 52 (Wis. Ct. App. 1984).

2. Commercial Gambling is a Class I felony and includes such activities as intentionally engaging in the operation of a gambling place; holding facilities for placing and settling bets; conducting lotteries with money as the consideration and prize; participates in the possession, set-up or operation of gambling machines. Wis. Stat. § 945.03 (2006). Legal riverboat casinos conducting gambling games from states adjacent to Wisconsin may be charged with commercial gambling under Wisconsin law should the riverboat enter Wisconsin water’s in its travel. 79 Op. Atty Gen. Wis. 206 (1990).

3. Any participant, owner, employer or coach who bets on an opponent in a game of skill, speed, endurance or strength is guilty of a Class A misdemeanor. Wis. Stat. § 945.07 (2006).

4. Intentionally allowing another or others to utilize property or real estate for illegal gambling activities is a Class A misdemeanor. Wis. Stat. § 945.04 (2006). Violation of this portion of the statute can be satisfied in one of two ways: (1) when it is shown that a gambling device is kept or set-up and; (2) when it is shown that the gambling device was actually used for gambling purposes. State v. Jaskie, 14 N.W.2d 148, 151 (Wis. 1944). Dealing in gambling devices is a Class I felony; dealing includes manufacturing and intent to transfer or transferring commercially. Wis. Stat. § 945.05 (2006). In an Attorney’s General Opinion, it was indicated that a “Las Vegas night” may be qualify as a violation of the statute governing dealing in gambling devices. 70 Op. Atty Gen. Wis. 59 (1981). Regardless, the opinion stated that a “Las Vegas night” – defined by the characteristics of participants making a donation in order to gamble with play money – would qualify as a violation of numerous other sections of the Criminal Code including § 945.02. Id.

In a tort action to recover damages for a destroyed gambling machine the court found that no damages could be recovered. Miller v. Chicago and Northwestern Railway Co., 141 N.W. 263 (Wis. 1913). The court determined that a gambling machine has no lawful value and furthermore, the fact that the machine was in transit when destroyed fell under Wisconsin Statute § 945.05, dealing in gambling devices. Id.

Pursuant to statute, gaming contracts are void in the State of Wisconsin. Wis. Stat. § 895.055 (2006). The statute states the following:

All promises, agreements, notes, bills, bonds, or other contracts, mortgages, conveyances or other securities, where the whole or any part of the consideration of the promise, agreement, note, bill, bond, mortgage, conveyance or other security shall be for money or other valuable thing whatsoever won or lost, laid or staked, or betted at or upon any game of any kind or under any name whatsoever, or by any means, or upon any race, right, sport or pastime, or any wager, or for the repayment of money or other thing of value, lent or advanced at the time and for the purpose, of any game, play, bet or wager, or of being laid, staked, betted or wagered thereon shall be void. Id.

Case law indicates that the public policy behind this statute is strong and that Wisconsin has a solid desire and interest in preventing the enforcement of gambling contracts

In State v. Gonnelly the court held that checks written and cashed at a racetrack for gambling purposes were void under this section of the Wisconsin statute, even if the funds from the check were going to be put towards approved and legalized forms of gambling within the State. 496 N.W.2d 671 (Wis. Ct. App. 1992).